Monday, December 6, 2010

Strategic Planning Analogy #367: Rules vs. Execution

The problem with sports is usually not the complexity of the rules. Usually, the basic rules are pretty simple. In golf, the basic rule is just to “hit a ball until you get it in the hole.” In soccer, the goal is to “kick a ball into a net.”

Unfortunately, simplicity of rules does not mean that the game is simple to play. I know a lot of frustrated golfers who get upset because they find it so difficult to get that little ball into that little hole.

Kicking a ball into a net sounds easy, but if it were easy, why do so many soccer games have such low scores? Apparently, just because you know where the net is and how to kick a ball does not mean that you will be able to kick that ball into that net.

I used to try to play billiards (pool). Before taking a shot, I would carefully calculate out what I wanted to accomplish. I’d work out the math, calculate the angles, and estimate the physics of what would happen when the billiard balls hit each other. After I got it all figured out, I would take the cue stick and hit the cue ball. Unfortunately, the ball never followed the trajectory I had calculated in my head. Because of my incompetency in hitting the ball, it would go a different direction at a different speed. All of those calculations were worthless when it came time to execute them.

I soon came to the conclusion I was wasting my time doing all of those calculations, since I did not have the ability to hit the ball in the direction my calculations desired. So now, I just try to hit the billiard ball very hard and hope it bounces around enough to make something happen.

I guess that’s why there are a lot more seats in a sports arena for spectators than there are for the athletes. Pretty much everyone in the arena knows the basic rules of the game being played. However, only a few of them are able execute the rules in a productive manner.

Businesses have basic rules, just like sports. For example, I’ve spent most of my life working in retail businesses. The basic rules for the business of retailing are pretty simple:

1) Buy goods at a low wholesale price.
2) Resell those goods to customers at a higher retail price.
3) Make sure the difference between your buying price and your selling price is large enough to more than cover all of your costs to sell those goods.

That sounds pretty easy, doesn’t it? However, every year thousands of retail stores close because they were not able to execute these simple rules. Just as in sports, merely knowing the rules does not mean that you will be successful in executing them.
Even if you master the business rules at a more sophisticated level, like I tried to do with billiards, it doesn’t necessarily mean that you can execute those rules at a more sophisticated level. It takes something more.

The principle here is that the knowing the rules is not the same as winning the game. Just as successful athletes bring more to the game than a knowledge of the rules, successful business people need to bring more to their company than a knowledge of the rules of business.

My Finance Friend
I used to work with someone in the finance department of a retail business. He was frustrated because one of the retail divisions at this company kept losing money. He kept yelling things something like “Why can’t these idiots just buy the right goods?” or “This division would make lots of money if those idiots would just sell all the items they bought” or “If these idiots would just quit having so many markdowns in price, they would stop losing money.”

This finance person was pretty smug about his comments. He thought he was superior to those people running the business, because he could see how they were not executing the basic rules of retailing. His idea of fixing the businesses was simple…just tell the people running it to follow the simple rules.

Of course, that would be like a spectator at a sporting event thinking he was superior to the athlete playing the game, because the spectator could see the violations of the basic rules. Yelling at a golfer “You should have hit that ball more accurately!” really is no help at all to the golfer. He knows that. He isn’t intentionally trying to be inaccurate.

Yelling at a soccer player, “If you hadn’t kicked the ball wide to the right, it would have gone into the net!” is equally worthless. The athlete knows the rules. He’s trying to get the ball into the net.

No, the spectator is not superior just because he or she can see the missteps of the athlete. If you put that spectator out on the playing field, I’m sure they would make even more mistakes than the athlete they are criticizing. Their comments are useless for helping win the game.

This is equally true for my finance friend. His comments were worthless to the folks running the retail division. They knew the rules and were trying to execute them. And I’m pretty sure my finance friend wouldn’t have done much better at execution if he were running the division.

What my finance friend did is an easy trap for strategists to fall into. Strategists tend to watch the operation of a business from a distance. They can see the missteps. It is easy then for a strategist to feel smug about themselves, because they see where the missteps are. It is then easy for them to tell everyone that the strategy is failing because of lack of proper execution. It is easy advice, but it is also worthless advice. And you won’t get much cooperation from the business division if all you do is criticize them.

The goal of a strategist should not be to merely point out mistakes. The goal is to help companies find a way to win.

Coaches don’t just tell their teams that they are lousy. No, they help find ways to make the team better. That is similar to what the role of a strategist should be. While everyone else is busy trying to execute, strategists have the luxury of observation and the time to ponder what is happening. This can be used to add value to the division by finding alternative approaches which will improve success.

Going Beyond Criticism
Rather than criticizing mistakes, a strategist should be helping to eliminate mistakes. There are many ways to do this.

First, one can work on strategies to fix the cause of errors. A golfer’s accuracy may be off because of a flaw in the swing. If you can identify the flaw and help the golfer find a way to correct that swing, then you have helped the golfer. Similarly, if you can identify the root cause of a business execution flaw and help find a path to correct that flaw, you have helped the business. To do this, a strategist may need to collect and study lots of data to find the behavior patterns which lead to errors. Or perhaps benchmarking would help find the cause of errors and how others fixed it.

Second, one can change the strategy so that it works with, rather than against, natural strengths. For example, a small, thin athlete shouldn’t be trying to compete as a sumo wrestler. That athlete would be better off changing to a sport better suited to his physiology. Perhaps you need to redirect the division to a new competitive space or a new positioning which is better suited to what you can do well. This involves finding your strategic fit.

Third, perhaps failure is occurring because you are missing a key element of success. For example, even if a team has great offense, it will still fail if it has no defense. It needs to build up the defense it is missing. Perhaps your company is missing something, like a key technology, or access to markets, or a particular expertise. You can help by identifying what is missing and helping to find a way to obtain it, either through acquisitions, or targeted hiring, or licensing of patents, or training, etc.

If you can help in these ways, you have really made a contribution. Now that would be useful strategic advice.

The goal of a strategist should not be mere criticism of execution. Yelling at people and telling them they messed up won’t fix the problem, and it will limit the cooperation you get form the people whom you need to execute the strategy. Instead, work with them to find ways to become better, by either improving performance or by changing paths to something where you can naturally perform better.

At a sporting event, it is the people on the field (the players and coaches) who earn a living, not the spectators. If you want to earn a living in the business field, be more than just a yelling spectator.

1 comment:

  1. Hello Gerald Nanninga,

    This great insight reminds me of a salesperson who was proud of his selling achievements. He bought gadgets for $10 each and sold them for $7. He was so successful till he ran out of money. You explain self-defeating tactics and strategies very well, Gerald. I thank you for sharing.